Foxconn: wage hike may not harm company
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The suicide-plagued IT manufacturing giant Foxconn said Monday that the company's decision to offer its Chinese mainland assembly line workers large wage hikes -- possibly causing a spike in operational costs -- may not damage company finances.
In a statement posted on the Hong Kong Stocks Exchange, the Foxconn International Holdings Limited (FIH HK2038), the company's listing arm, says the company cannot immediately determine the impact of the wage adjustment on the group's financial earnings for the year ending Dec. 31, 2010.
"There are other factors which may help mitigate or offset such an increase in operating costs, such as an increase in revenue or a reduction in other operating costs," the statement noted.
On Sunday night Foxconn said it would raise salaries for assembly workers at its production base in the southern Chinese city of Shenzhen by 66 percent to 2,000 yuan (293.3 U.S. dollars) per month as of Oct. 1, a decision coming after 10 workers killed themselves and three attempted suicide at the company's Shenzhen base this year.
Last Wednesday Foxconn announced a 30-percent pay increase for workers at its Shenzhen plants beginning in June for what it claimed were "rising consumer prices and living costs and its corporate performance."
But it is not immediately clear how many of the company's 400,000 Chinese mainland workforce would benefit from the wage hike.
"The criteria for carrying out the work performance assessment referred to above (the wage hike) are still to be decided by the company," according to the statement.
Trading in Foxconn stock was halted immediately after the Hong Kong exchange opened Monday morning. Its shares ended at 5.66 HK dollars before the trading suspension, down 5.5 percent from the previous closing.
Foxconn also announced that its stock would resume trading on Tuesday.
Foxconn, whose parent company is the Taiwan-based Hon Hai Group, makes computers, game consoles and mobile phones for companies including Apple, Hewlett-Packard, Sony and Nokia.
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